Frameworks Flashcards
What are the types of frameworks?
There are Four types of frame works:
a) General purpose framework (for wide range of users)
b) Special purpose framework (for specific users)
c) Fair presentation framework
d) Compliance Framework
what are the general purpose frame work?
it includes
a)IFRS
b) IFRS FOR SME’S
c) NATIONAL FRAMEWORK
d) XYZ LAYS OF JURISDICTION
What are the Special purpose framework ?
there are four basis for preparing this framework:
a) Regulatory Basis(established by regulators)
b) Tax basis (to accompany a entity Tax return)
c) Cash basis ( prepared for creditors)
d) Contractual basis ( made by individual party in term of loan agreement or Project grant contract)
What paragraphs are added in report about frame work?
“Emphasis of matter” paragraph for explaining that special framework is used.
“Other matter paragraph” to restrict the distribution of report
What are the Fair presentation framework ?
It requires:
a) Compliance with requirement of Framework
b) Contain Achknowledgment that, to achieve the fair representation it may be necessary for management:
a) Provide additional disclosure.
b) depart from requirement of framework.
Auditor express opinion weather:
a) financial statement give true and fair view in accordance with framework.
b) financial statement presented fairly in all material respects.
What are the compliance framework?
It Requires:
a) Compliance with requirement of framework.
b) Do not contain acknowledgement that are contained in fair representation framework (additional disclosure and departure).
Auditor shall express opinion:
financial statements are prepared in all material respects, in accordance with framework.
What are the responsibilities of Management?
there are three main responsibilities of Management:
a) Preparation of F/S in accordance with AFRF.
b) Design and implementation of Internal Control.
c) To provide auditor with all relevent information and additional information requested by auditor.
What are overall responsibilities of Auditor?
objectives and resposibilities
there are three ain resposibilities of Auditor:
a) Obtian resonable assurance
b) To give report on F/s
c) To Communicate findings (as required by ISA’s)
resonable assurance means F/s free from material misstaement.
what are the main types of stake-holders?
There are five main types of stake holders:
a)Existing and prospective share holders
b)Holding company
c)Lenders
d)Doners
e)Tax authorities
What are the expectation gaps by stake-holders?
there are main six expectation gaps by stake holders:
a) Auditor prepares the financial statement
b) Auditor check 100% transactions
c)Auditor provide absolute assurance
d)Auditor is responsible to detect fraud.
e)Auditor is** responsible to express openion on Internal controls**
f)** Emphasis of matter paragraph,other ,matter paragraph and Material uncertanity related to giong concen** is modified openion.
how many types of assurance?
there are three main types of assurance:
a) Limited assurance
b) Reasonable assurance
c) Absolute assurance
what are the limited assurance?
It is:
a) Moderate level of assurance express in negative form of conclusion.
b) ‘Nothing has come to our attension that causes us to beleive that F/s donot give triue and fair view”
c) It is given in review of historical F/s
What are the resonable assurance?
a) It is high but not absoute level of assurance which is expressed in positive form of conclusion.
b) It is given in Audit of Historical F/s.
c) Finacial statemnet give true and fair view in accordance with famework.
what are the inherit limitation of Audit?
there are three main inherit Limitations of audit:
1.)Nature of F/s ( include estimates ,judgements and uncertanities)
2.) Nature of Audit procedures ( Judgement is involved).
a) Mgt not provide complete information
b) Auditor donot have legal power to search
c) Fraud involve collusion and complex
techniques
3.) Time and cost limitation.
4.) Other matters in which its is difficult to identify misstatement
a) Transaction with related party
b) Non complience with laws & regulations
c) Going concern issues
What is sufficient and appropriate audit evidence?
1. Sufficiency
is measure of Quantity of evidence
Sufficiency is effected by:
a) Risk
b) Quality
2. Appropriateness of Evidence
is measure if quality of evidence
Appropriateness is effected by:
a) Relevance
b) Reliability of Informaton
Evidence should be sufficient and appropriate
